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The Importance of Automation Process in Banks & The Role of Technology

Ghida Mouhammad Mekdachi

Arts, Sciences, and Technology University in Lebanon

HQSU22-FIN425-Banking practical training

Dr. Osseyma Moghrabi

Summer 2022
THE IMPORTANCE OF AUTOMATION PROCESS & TECHNOLOGY IN BANKS 2

Abstract

Without question, digital technology has made front-end operations at banks considerably

simpler. Consumer accessibility and comfort have risen due to the simplicity of downloading a

check via a banking app rather than going to a physical facility. The success and expansion of a

company depend just as much on the back-office accounting functions of a bank. Scalability and

monitoring of the financial close are far more challenging when using conventional approaches,

such as manual processes and spreadsheets. For all accountants and financial staff, switching to

automation software for the financial closure process improves workflow and creates a number

of new options (Clem, 2020). In this paper, the importance of automation processes and

technology in offering greater customer service and better workflow in banks is discussed.

Keywords: Technology, Financial processes, Banks, Automation, Consumer Satisfaction,

Robotic Process Automation (RPA).

Table of Content

Abstract 2
Introduction 4
Power of Automation in Banking 4
Uses of RPA in Banking 5
Automatic Report Generation 5
Customer Onboarding 6
Know your customer (KYC) and Anti-Money laundering (AML) 6
Account Opening 7
Mortgage lending 7
Loan processing 8
The Role of Technology in Customer Satisfaction in Banking 8
Lower Costs and Increased Efficiency 8
Increased Personalization 8
Better Customer Retention 9
Fewer Human Errors 9
Ease of Use 9
Efficient Service 9
Conclusion 10
References 11
THE IMPORTANCE OF AUTOMATION PROCESS & TECHNOLOGY IN BANKS 4

The Importance of Automation Process in Banks & The Role of Technology

Introduction

Banks and other financial institutions are currently under intense pressure to reduce

expenses and increase productivity. The banking industry also has difficulties with a lack of

trained workers, the need to improve process efficiency, and a dramatic rise in labor expenses, all

of which have led to the use of robotic process automation (RPA) (Maruti Techlabs, 2019).

The use of robust robotic process automation software to install desktop and other end-

user device-level software robots and to create an artificial intelligence workforce or virtual

assistants is the primary definition of robotics in banking and finance. RPA in the banking sector

is a helpful instrument for meeting the urgent needs of the industry and assisting banks in

increasing efficiency by lowering costs using the services-through-software paradigm (Maruti

Techlabs, 2019).

Banks and financial institutions need to adopt a strategic strategy rather than a tactical

one to take advantage of this potential. In the coming years, machines and software bots will do

10 to 25 percent of operations across a variety of bank functions, increasing total capacity and

allowing the employees to concentrate on higher-value jobs and projects, according to a

prediction by McKinsey (Maruti Techlabs, 2019).

Power of Automation in Banking

According to reports, banks and financial institutions have spent more than $321 billion

on fines and compliance-related procedures over the past ten years. Banks are thought to spend

close to $270 billion annually on compliance-related activities alone. Compliance expenses

account for around 10% of a bank's operating expenses (Maruti Techlabs, 2019).
THE IMPORTANCE OF AUTOMATION PROCESS & TECHNOLOGY IN BANKS 5

According to (Maruti Techlabs, 2019), rising operating costs, added to regulatory fines

and strict regulatory standards, slow down procedures and have an adverse impact on the

customer experience. There is no way to solve the dilemma of managing compliance while

reducing operational costs by adding more personnel to the task.

Robotic process automation can help banks and finance organizations save human labor,

provide better compliance, lower risks, and improve customer satisfaction overall. Automation is

best suited for banks and financial institutions because it uses a low-code approach and doesn't

require any additional infrastructure (Maruti Techlabs, 2019).

RPA's main objective in the banking sector is to help with the processing of repetitive

banking tasks. By involving consumers in real-time interactions and taking advantage of robots'

many advantages, robotic process automation (RPA) aids banks and other financial organizations

in boosting efficiency (Maruti Techlabs, 2019).

RPA is a lengthy procedure that calls for in-depth personnel training, organized inputs,

and oversight. These RPA-based banking robots can, however, fully handle system (mouse and

keyboard) actions, including clicking & launching programs, sending emails, and pasting data

from one financial system to another, once set up and executed appropriately.

Uses of RPA in Banking

Automatic Report Generation

At banks and financial institutions, creating compliance reports for fraudulent

transactions in the form of suspicious activity reports, or SARs, is a standard obligation.

Traditionally, compliance officers are expected to physically read all of the reports and complete

the SAR form with the appropriate information. This makes it a labor-intensive, highly repetitive

process that takes a lot of time (Maruti Techlabs, 2019).

RPA technology can go through this lengthy compliance paperwork and generate natural

language before extracting the necessary data and submitting the SAR. For best results, the

compliance officers' suggestions for the portions of each document that correspond most closely

to each area of the report can be used to train the RPA program. This not only aids in lowering

operational costs but also cuts down on the amount of time needed to complete the activity.

Customer Onboarding

Bank customer onboarding takes a very long time since various documents need to be

manually verified. By employing optical character recognition to extract the data from the KYC

documents, RPA can significantly simplify the procedure (OCR). The information that the

customer gave in the form can then be compared to this data (Maruti Techlabs, 2019).

After the automated matching, if there are no differences, the information is

automatically entered into the client management interface. RPA automation in client onboarding

not only assists in preventing manual errors but also helps staff save a significant amount of time

and effort.

Know your customer (KYC) and Anti-Money laundering (AML)

Both KYC and AML are very data-intensive processes, thus RPA is best suited for them.

When compared to conventional banking solutions, RPA deployment proved to be extremely

effective in saving time and money by automating tedious operations and identifying fraudulent

banking activities (Maruti Techlabs, 2019).

Account Opening

The lengthy account opening procedure is made considerably simpler, faster, and more

precise with RPA. The data quality of the entire system is improved via automation, which

systematically eliminates the data transcription errors that existed between the core banking
THE IMPORTANCE OF AUTOMATION PROCESS & TECHNOLOGY IN BANKS 7

system and the requests for new accounts. Global banks deploying robots to extract data from

input forms and then feed it to various host applications during the account creation process are a

great illustration of this.

As a result, there is no longer a need for a labor-intensive, error-prone manual data input

process, which reduces TAT significantly while preserving operational accuracy and containing

expenses (Maruti Techlabs, 2019).

Mortgage lending

One of the most important service areas for any financial organization is lending. The

mortgage lending process is quite procedure-driven and time-consuming, which makes it very

appropriate for RPA automation. With explicitly specified rules, RPA technology may be used to

handle the process (and exceptions, too!) with ease.

Numerous processes that are essential to the mortgage lending process can be easily

automated with RPA, including loan commencement, document processing, financial

comparisons, and quality control. As a result, loans can be authorized significantly more quickly,

increasing client satisfaction.

RPA in mortgage lending also frees up staff from manual labor, allowing them to

concentrate on other worthwhile tasks and increase productivity (Maruti Techlabs, 2019).

Loan processing

It has traditionally been thought of as a tediously slow process to process loans. Even

though the bank has partially automated the procedure, RPA further quickens it and reduces

processing time to a record 10-15 minutes (Maruti Techlabs, 2019).

The Role of Technology in Customer Satisfaction in Banking

The contact between banks and their customers can be automated across many

touchpoints, including mobile apps, call centers, websites, online chat, etc., to offer a tailored

and consistent customer experience.

Banks can handle every activity with automated procedures thanks to intelligent banking

customer service (Itexus Team, 2021). For banks, automating customer care has four major

advantages including:

Lower Costs and Increased Efficiency

Automating bank help promotes digital self-service and enables clients to find solutions

to their problems without speaking to live people. Bank personnel have more time for more

complicated jobs that call for emotional intelligence and a personal touch when mundane tasks

are eliminated (Itexus Team, 2021).

Increased Personalization

Customers that receive individualized banking services are more engaged, which

improves traffic and conversions. As a result, the company has a stronger return on investment

and sales (Itexus Team, 2021).

Better Customer Retention

The goal is to turn an ordinary consumer into a devoted one. By following up with clients

after encounters, sending surveys to collect feedback year-round, segmenting customers by

account type, creating more individualized offers, and other activities, automation can assist

businesses in accomplishing this (Itexus Team, 2021).

Fewer Human Errors

Banks may significantly reduce administrative errors by adopting automated customer

service, which also helps to save lost time and customer complaints. The bots don't need breaks

as they labor nonstop on repetitive chores. Employees also feel less overworked and commit

fewer errors (Itexus Team, 2021).

Ease of Use

Banking may be challenging, particularly online. It's crucial that the bank offers the most

complete and user-friendly mobile experience possible because of this. Chatbots will aid in

gaining a more complete understanding of the entire service and product offering and will

automatically pass any inquiry to the proper human professional if the situation calls for it

(Itexus Team, 2021).

Efficient Service

This phrase refers to problem-solving that is quick and efficient as well as cordial bank

communications. Customers do not want to be kept waiting for hours. Therefore, both the first

response time and the whole turnaround time for resolving the customer's issue are critical.

Automated banking systems provide prompt service, are courteous, and drastically cut down on

wait times. Because staff may react right away to major concerns, even complex ones are

resolved more quickly (Itexus Team, 2021).

Conclusion

Over time, there has been substantial progress in banking automation. Before digital

systems and the internet, banks built and managed their accounting and loan transaction

procedures manually. Nowadays, conducting interbank transactions, processing loans, and

performing other banking tasks like internet access are all made possible by banking automation.
THE IMPORTANCE OF AUTOMATION PROCESS & TECHNOLOGY IN BANKS 10

Automation helps minimize costs by reducing the amount of time a representative must devote to

tasks that don't require their direct involvement. Employee flexibility allows them to work on

other projects for the business, which boosts output (Chhabra, 2022).

Despite the benefits, even for IT experts, automating banking can be a challenging

undertaking. With the use of technology, banks can automate their operations and increase

productivity without adding complexity to compliance-related activities.

In order to differentiate themselves from their rivals, various financial service firms are

working to incorporate more efficient automated technology. Particularly in these times of

increasing market pressure and low borrowing rates, businesses are working hard to deliver a

terrific user experience that lives up to the expectations of their customers (Chhabra, 2022).
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References

Chhabra, A. (2022, May 29). Automation in Banking and Finance. Nanonets. Retrieved

August 7, 2022, from https://nanonets.com/blog/banking-automation/#conclusion

Clem, A. (2020, October). Benefits of Financial Automation Software for Banking.

Trintech. Retrieved August 7, 2022, from

https://www.trintech.com/blog/2020/10/benefits-financial-automation-software-for-

banking/

Itexus Team. (2021, December 10). Banking Customer Support Automation:

Development Guide. Itexus. Retrieved August 7, 2022, from https://itexus.com/banking-

customer-support-automation-development-guide/

Maruti Techlabs. (2019, October 5). 8 Benefits of Implementing RPA in Banking and

Finance. Maruti Techlabs. Retrieved August 7, 2022, from https://marutitech.com/rpa-in-

banking-and-finance/